Dear Momentum Options Subscriber,
Earnings season has been a mixed bag, depending on who you have been listening to, but the market has been holding up well overall despite the hits and misses.
The flood of first-quarter earnings is behind us, but there will be a steady stream of results trickling in over the next month or so. While it may be a bit premature to mention, second-quarter earnings season starts in July. In the meantime, here is a peak at the companies that have earnings on deck this week.
After the close today, Carmike Cinemas (CKE), Denny’s (DENN), Tenet Healthcare (THC) and Texas Roadhouse (TXRH) will report their latest quarterly results.
On Tuesday, Bloomin’ Brands (BLMN), DirectTV (DTV), Electronic Arts (EA), Estee Lauder Companies (EL), Fossil (FOSL), Kellogg (K), Louisiana-Pacific (LPX), Noodles & Company (NDLS), Potbelly (PBPB), Walt Disney (DIS), Weight Watchers International (WTW), Zoetis ( ZTS) and Zulily (ZU) will confess their numbers.
On Wednesday, earnings from 3D Systems Corporation (DDD), Chesapeake Energy (CHK), Famous Dave’s of America (DAVE), Keurig Green Mountain (GMCR), Papa Murphy’s Holdings (FRSH), Rosetta Stone (RSI), Tesla Motors (TSLA), Wendy’s International (WEN) and Whole Foods Market (WFM) will highlight the action.
Thursday’s movers and shakers will include Apache (APA), Black Box (BBOX), CBS (CBS), Dot Hill Systems (HILL), Jazz Pharmaceuticals (JAZZ), Nuance Communications (NUAN), TreeHouse Foods (THS), Zynga (ZNGA) and Hyatt Hotels (H).
Finally, the week will wrap up with AOL (AOL), BlueNile (NILE), Geeknet (GKNT), Heath Care REIT (HCN) and WhiteWave Foods (WWAV).
We will likely have two earnings trades in play this week with HILL and Opko Health (OPK). While there is a chance that I will swing the bat at one of the other names listed above, there are other trades I like better that can avoid the earnings headlines risk.
Heading into the second half of trading, the Dow is higher by 76 points to 18,100, while the S&P 500 is up 8 points to 2,116. The Nasdaq is gaining 24 points to 5,030, and the Russell 2000 is advancing 8 points to 1,236.
I have one New Trade for the portfolio listed below. I could also have additional Trade Alerts into the close, so stay on your toes.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 46-14-1 (75%). All trades are dated and time stamped so new subscribers can look at the past history to see how the trades have played out.
Do not risk more than 5% of your trading account on any one trade but do try to take all of the trades. Please remember, all “Exit Targets” and “Stop Targets” are targets. You should not have any “Hard Stops” entered to close any trades or “Exit Orders” in your brokerage account unless I list one. I will send out a “Profit Alert” or “New Trade” if I want you to close a position or if a new trade comes out. Otherwise, follow instructions at all times in the 9 a.m. and 12 p.m. – 1 p.m. updates. Also, I will usually give you a heads-up if I think I’m going to send an email outside of these time frames.
All prices given in this update are current as of 12:30 p.m. EST.
Every new Momentum Options recommendation is listed with the price at which I entered my own position. If the price is slightly different than my recommended entry or exit price when you receive the alert, don’t let that keep you from getting into or out of a trade. Occasionally, you might even get a better “fill” price than what is posted in the Open Trades and Closed Trades.
Wells Fargo (WFC, $55.60, up $0.41)
Buy to open the WFC June 57.50 calls (WFC150619C00057500, $0.31, up $0.06) at current levels.
The 52-week high is at $56.26, and shares are holding their 50-day moving average. A close above $55.75 should be the trigger that gets shares pushing fresh highs. These are the regular monthly calls that expire on June 19.
Limelight Networks (LLNW, $4.18, up $0.11)
LLNW September 4 calls (LLNW150918C00004000, $0.60, up $0.10)
Entry Price: $0.35 (4/29/2015)
Exit Target: $0.70 (Limit Order on half)
Stop Target: None
Action: Shares have traded up to $4.20 and another fresh 52-week peak today. Resistance is at $4.20-$4.25. Support is at $3.80-$3.75 on a pullback. The five-year weekly chart is showing that a near-term run to $4.50-$5 could be coming on continued momentum.
You can read my full update on LLNW in the May 1 Pre-Market Update.
Krispy Kreme Doughnuts (KKD, $18.24, up $0.18)
KKD June 17 puts (KKD150619P00017000, $0.60, down $0.05)
Entry Price: $0.35 (4/28/2015)
Exit Target: $1.05 (closed first half at $0.70 on 4/29/2015)
Stop Target: $0.50 (Stop Limit)
Action: Resistance is at $18.25. Support is at $17.75-$17.50 on another drop below $18.
Earnings are due out the first week of June, and I have a target of $15 for KKD going into or after the announcement.
You can read my full update on KKD in the April 29 Pre-Market Update.
Opko Health (OPK, $14.32, up $0.29)
OPK June 16 calls (OPK150619C00016000, $0.35, flat)
Entry Price: $0.50 (4/27/2015)
Exit Target: $1.00
Stop Target: None
Action: Resistance is at $14.25-$14.50 and the 50-day moving average. Support is at $14.
Earnings are estimated to be released on Friday, May 8. Analysts are looking for a loss of $0.08 a share on revenue of $23 million. I believe OPK will top these numbers.
Dot Hill Systems (HILL, $6.48, down $0.14)
HILL September 7.50 calls (HILL150918C00007500, $0.55, flat)
Entry Price: $0.45 (4/20/2015)
Exit Target: $1.35-$1.80
Stop Target: None
Action: Resistance is at $6.50-$6.75 and the 52-week high. Near-term support is at $6.25.
Earnings are estimated to be released on Thursday, May 7. Wall Street is expecting a profit of $0.06 a share on revenue north of $59 million. The company has beaten or matched estimates the past four quarters, and another upside surprise could have shares pushing $7. There is risk back to $6 on an earnings miss or lowered guidance.
Trades on Hold — other 2015 Portfolio Open positions (3): These are trades that are still open in the portfolio but are down over 50%. They have longer expiration dates and are on “hold” but are not worth mentioning until they turn around. This means I would not open any new positions. I’m still keeping track of the trades and will record the results accordingly when the trade closes or if the options expire. Click on the Open Trades and Closed Trades pages to see all open and closed positions.
SunPower (SPWR) June 38 calls (from April 2015) — I will likely close this trade if support at $30 fails. Resistance is at $32.50 — Continue to hold.
iShares Russell 2000 (IWM) May 127 calls (from April 2015) — I would like to be out of this trade by this Friday, win, lose or draw — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — This is a speculation trade from early March on BBRY receiving a takeover offer of $14 or better by mid-June — Continue to hold.
Editor and Chief Options Strategist
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